Choosing the Right Business Structure: What Every Entrepreneur Needs to Know

Starting a business is an exciting journey, but before you launch your brand or sign your first contract, one of the most important decisions you will make is choosing the right legal structure for your business. There is no one-size-fits-all solution, and your decision will have far-reaching consequences for tax, liability, control, and even future growth.

At our firm, we regularly advise entrepreneurs, start-ups, and growing businesses on structuring their operations in the most effective and protective way. Here is a brief overview of the most common business structures – and why getting legal advice early on can save you time, stress, and money later.

• Sole Trader
  The simplest business structure – and often the starting point for freelancers and solo entrepreneurs. As a sole trader, you and your business are legally the same. This means you keep all the profits, but you are also personally responsible for any losses or liabilities.

This structure works well for low-risk ventures, but as your business grows, so do the risks. That is why many sole traders eventually move to a more protective structure.  It also serves to reduce the extra administrative costs associated with corporate structure vehicles.

• Partnership
  In a general partnership, two or more individuals share responsibility for running the business. Like sole traders, partners are personally liable for the debts of the partnership – and that liability is joint and several. This means each partner can be held responsible for the full amount.

There are also limited partnerships and limited liability partnerships (LLPs) which offer varying degrees of protection and flexibility. Choosing between them depends on how you want to manage risk, profits, and responsibilities.

We often see partnerships fall into difficulty due to vague or outdated agreements. Having a clear, tailored partnership agreement is essential.  We can help you choose your organisational structure.

• Private Limited Company (Ltd)
  A private limited company is a separate legal entity. This means it can own property, sue and be sued, and – importantly – its shareholders enjoy limited liability which means you personally are only responsible for the company’s debts up to the value of the monies unpaid on your shares.

A limited company can be set up with a single director and shareholder, but you will need to keep proper records, file annual accounts, and comply with company law. That is where expert legal advice can help you avoid common pitfalls and stay compliant.

• Community Interest Company (CIC) and Other Special Structures
  Some businesses are set up not just to make profit, but to benefit the wider community. If that is your aim, a CIC might be the right choice. There are also charitable incorporated organisations (CIOs) and other non-profit structures that offer credibility and protection, but they come with specific rules and requirements.

It is crucial to obtain legal advice early to make sure your structure matches your values – and your vision.

Which Structure is Right for You?

The right business structure depends on your goals, the nature of your business, your appetite for risk, and your long-term plans. Changing structure later is possible – but not always easy or cheap.

At Moore & Tibbits, we work closely with business owners at every stage – from initial setup to restructuring, expansion, and succession planning. Our advice is tailored, strategic, and commercially minded. We will not drown you in legal jargon – we will focus on what matters most to you and your business.

Thinking of starting or restructuring a business?

Let’s talk. The right structure is the foundation of long-term success – and getting it right from the outset can give you peace of mind, legal protection, and room to grow.

If you need help with setting up a business or choosing the right structure, please email Monika on monikaj@moore-tibbits.co.uk or speak to our Commercial Team on 01926 491181.

Article by: Monika Jirec